Chapter 60.
HOW WE GOT STARTED - Pleasant Rowland

Innovation: First company to recognize girls ages 7 to 12 as an underserved market. Also created black and Hispanic dolls coveted by children of all races.

How It Changed the World: Pleasant Company clearly identified the intellectual and consumer appetite of the "tween" demographic. Combining collectible dolls with a series of books made playing and learning fashionable.

Legacy: The market uncovered by Pleasant Company didn't stay invisible for long. As Rowland's business grew, the 1990s also saw preteen girls becoming a core audience not only for books and dolls, but the music and entertainment industry. The Olsen twins, Britney Spears, and a bevy of boy bands all stand on the shoulders of tween girls, an annual market of $93 billion in the U.S.

Overview: Some might say that 45 is too old to be playing with dolls, but for Pleasant Rowland it was the beginning of something historic. Rowland's midlife foray into the business of posable arms and tiny shoes made her not only a hero to little girls nationwide but a toy industry legend. When Rowland debuted her American Girl dolls in 1986, the industry pegged her eponymous Pleasant Company as a surefire failure. Everyone knew, of course, that many girls abandon doll play after age 6. A line of historical dolls for 7- to 12-year-olds? Preteen girls had largely been ignored as a distinct demographic -- and they turned out to be a multibillion-dollar opportunity. With 82 million books and seven million dolls, the American Girl line is second only to Barbie as the most popular doll in America. 2001 sales: $350 million. But Rowland insists it is the books that unlock the mystery of American Girl's staggering success. Each of the eight American Girl dolls has a series of six books that tell her life story. Felicity's details life in Colonial America; Kit's teaches girls the lessons of growing up during the Depression. Along with the books, the dolls have a universe of extras like matching outfits for doll and owner, mini tea sets and steamer trunks to enact scenes from the books, and American Girl magazine, with 650,000 subscribers. "Chocolate cake with vitamins" is how Rowland describes the mix of imagination, history, and values. She holds fast to her Midwestern morals in Pleasant Company's efforts to do right by little girls. "Mothers were tired of the sexualization of little girls, tired of making children grow up too fast," says Rowland. "They yearned for a product that would both capture their child's interest and allow little girls to be little girls for a little longer." The toy industry got the message: In 1998, Mattel bought Pleasant Company for $700 million. Now retired, Rowland shared her story -- and her mania for execution -- with FSB.

--Julie Sloane

A New Twist on Timeless Toys

By Pleasant Rowland

"I started Pleasant Company when I was 45 and I'd already had several careers. I'd been an elementary school teacher, a TV news reporter, the author of reading textbooks, and the publisher of a small magazine. I had no formal business education. In 1984 my husband invited me to join him at a convention at Colonial Williamsburg. Off I went, thinking I was going to have a nice little vacation. Instead it turned into one of the seminal experiences of my life. I loved sitting in the pew where George Washington went to church and standing where Patrick Henry orated. I loved the costumes, the homes, the accessories of everyday life -- all of it completely engaged me. I remember sitting on a bench in the shade, reflecting on what a poor job schools do of teaching history, and how sad it was that more kids couldn't visit this fabulous classroom of living history. Was there some way I could bring history alive for them, the way Williamsburg had for me?

The following Christmas my two nieces were 8 and 10 years old, and I wanted to give them each a doll. To my horror, that was the Christmas that Cabbage Patch Kids hit the market. I thought they were ugly, and Barbie wasn't what I had in mind either. Here I was, in a generation of women at the forefront of redefining women's roles, and yet our daughters were playing with dolls that celebrated being a teen queen or a mommy. I knew I couldn't be the only woman in America who was unhappy with these Christmas choices.

My Williamsburg experience and my Christmas shopping experience collided, and the concept literally exploded in my brain. I wrote a postcard to my closest friend, which is still in the archives of Pleasant Company. It said, 'What do you think of this idea? A series of books about 9-year-old girls growing up in different times in history, with a doll for each of the characters and historically accurate clothes and accessories with which girls could play out the stories?' In essence, I would create a miniature version of the Colonial Williamsburg experience and take it to American girls using the very playthings -- books and dolls -- that girls have always loved. I wouldn't invent a new toy but rather add meaning and relevance to the most timeless ones.

Once the idea had formed, I could think of nothing else. In one weekend I wrote out the concept in great detail. I defined the first three characters, the product line, the series of books, the matching girls' clothing, the retail store concept, even the idea for a musical. My pen flew as I tried to capture the idea that was just given to me -- whole. This was my business plan!

Unlike most entrepreneurs, I did not have to beat the bushes for startup funding. I had saved $1.2 million from textbook royalties, and American Girl seemed like a million-dollar idea. I put $200,000 aside in case all failed and plunged in. Though I had experience creating books, I hadn't a clue how to make dolls or the myriad clothes and accessories I envisioned for them. I didn't even have a model of a cute doll, so I sent a friend to Chicago to find one. By the end of the second day, she found one at Marshall Field's, down in the storeroom, covered with dust. Nobody had paid any attention to this doll because it had crossed eyes! The sales clerk had no idea where it had come from, but when we undressed the doll, sewn inside the underpants was a label that said 'Goetz Puppenfabrik, Rodental, West Germany.' A series of letters and phone calls later, I was in Germany picking out fabrics and ribbons and clothes for the American Girl dolls.

While the dolls were being made in Germany, we produced the books in our own office and found vendors in China to make the miniature accessories. Our goal was to be in the market for Christmas of 1986. I hired a marketing manager, who recommended that we do a couple of focus groups, just for 'peace of mind' -- a prudent suggestion that had never crossed my mind. I remember sitting behind the mirrored glass window while the focus group leader described the American Girl concept to a group of mothers. They thought it was the worst idea they'd ever heard. They absolutely panned it. I was devastated -- and terrified. It had never really entered my head that this idea could fail! Then during the second half of the focus group, the leader brought out the doll with a sample book, her little bed, and her clothes and accessories. Before our eyes, the same group of women did a 180. Complete flip-over. They loved it. The experience crystallized a very important lesson for me: Success isn't in the concept. It's in the execution.

And that's what's so exhausting for an entrepreneur. If you have a strong vision -- and mine was incredibly detailed -- you can't let any piece of its execution go. Everything has to be a ten. I knew there was magic in the American Girl concept, but it was in the whole idea, not just part. I knew the books had to have stories so good that the reader would identify with and fall in love with the character. If she loved the character, she would want the doll. If she had the doll, she would want the clothes and accessories to play out the stories. If she played out the stories, she would want more books. So nothing could disappoint. The product had to be right, down to the tiniest detail.

And once we got the product right, the marketing had to have some magic in it. It was clear to me that American Girl was a thinking girl's product line, one that would not sell at Toys 'R' Us. It wasn't meant to blare from the shelves on its packaging or visual appeal alone. It had a more important message -- one that had to be delivered in a softer voice. A 30-second commercial couldn't do the job -- a strategy we couldn't afford anyway. How could I get this message across to girls and their mothers? Direct mail was the answer -- an industry that was rising fast. Lands' End is up the road from Pleasant Company. Good friends and neighbors who worked there were most generous in teaching me the basics of the business -- even though they thought my product line would never work and told me so!

The list-management company advising us on our mailing list also thought American Girl was going to be a huge failure. They told us to mail no more than 100,000 catalogs. I said, 'No way.' We had to take our shot that Christmas, and American Girl would either succeed or fail. So we mailed 500,000 catalogs and crossed our fingers.

And American Girl took off. Between Sept. 1 and Dec. 31, 1986, we sold $1.7 million worth of product. For all the money the company made subsequently, none of it was as fun or rewarding as that first million dollars. That first Christmas we cobbled together packing stations out of plywood and old doors. We were in a broken-down warehouse with one freight elevator. Workers wore mittens because there was no reliable heat. The week before Christmas we ran out of bedspreads for one of the doll beds. We closed the offices so that everyone could sew more bedspreads to fill the Christmas orders. We lived on adrenaline. In the second year sales grew to $7.6 million, and we outgrew our funky little warehouse and moved to a new building in a cornfield on the outskirts of town. Then, just as we finished setting up our new operation in time for our third Christmas, I was diagnosed with breast cancer. I cut the ribbon on the new warehouse in the morning and went into the hospital that afternoon to have surgery. It was a large tumor, and I had a poor prognosis, but throughout chemotherapy and radiation I never missed a day of work, and work is probably what saved me. Pleasant Company was on such a roll. I loved what I was doing, and, after all, my mind didn't have cancer. I just got through.

In the next four years the American Girl brand grew to $77 million, fueled only by direct-mail catalogs and word of mouth. It was hot with young girls, an audience largely ignored before. To expand the brand, we created Bitty Baby dolls and books for younger girls, and for older girls we created modern girl dolls, American Girl magazine, and a line of advice books about friendships and social interactions. Sales grew in the next five years to almost $300 million in about $50 million increments each year.

The last important piece of the original business plan came into being with the building of American Girl Place in Chicago and the launch of a musical there, The American Girls Revue. This would be the American Girl mecca, an extremely special environment with a store, a theater, a museum, and a restaurant. American Girl Place opened for Christmas 1998, grossing $40 million a year from the day it opened.

Finally my vision was complete, my original business plan had been executed, and I was tired. It was time to sell the company. I sold American Girl to Mattel for $700 million. Why Mattel? I felt a genuine connection to [then CEO] Jill Barad, the woman who built Barbie. The ironies did not escape me, and many were critical of my decision, but I saw in Jill a blend of passion, perfectionism, and perseverance with real business savvy. During the same 13-year period that I built American Girl from zero to $300 million, Jill built Barbie from $200 million to $2 billion. An amazing feat.

I'll never forget the day I signed the papers to complete the sale. The documents were just sitting in my in basket as innocently as any memo. I waited until the end of the day, signed them, and headed home. As I walked out the door, I stopped and looked around at all I had built, expecting to be overwhelmed by sadness or loss. But no emotion came. I drove home thinking, What's wrong? Why don't I feel anything? It was then I realized that I had never felt I 'owned' American Girl. I had been its steward, and I had given it my very best during the prime of my career. It was time for someone else to take care of it. American Girl was a wonderful chapter in my life that is now closed. And on we go."